Buying Your First Home
(The Complete Guide for first time home buyers)
Buying your very first home can be an ever daunting endeavour. The sheer agony, stress, and surmountable overwhelmingness can freeze you where you stand before you even get started. Not only is it hard to get the ball rolling and know what and how to look for the perfect home, you also have to figure out how you can afford it. The cost of a home is much greater than it use to be but fortunately:
YOU CAN AFFORD IT!
I’ll explain to you how easy it is to buy your first home and crawl out of the bottomless pit of having to pay rent, or in other words take the money in your pocket and use it to build equity for someone else, rather than your own.
KEEP YOUR MONEY IN YOUR OWN POCKET!
Getting started is much easier than you think. The best thing to do is find a REALTOR®. An agent will have and offer everything you need to purchase your first home. They offer experience and knowledge and will make sure you are buying something that isn’t going to sink into the ground. An agent will help guide you to the perfect home.
AS A BUYER YOU DO NOT PAY REALTOR® FEES/COMMISSION, SO WHY NOT TAKE ADVANTAGE?
You should sit down with your agent and really lay out what is important to you in a home, what are the things that you really need, not want. These things are very different. If you find a home with 6/10 needs, then you are way ahead of the game. Needs include things such as number of bedrooms, location, number of bathrooms, size of the house, architectural style of the home, condominium, apartment, townhouse, yard, etc. These are usually things you can not change easily and/or can not live without. Depending on your budget, your agent will do their best to find as many of your needs as they can within your price range.
A swimming pool in the backyard is not a need.
Searching for a home can take a long time, it is a huge purchase, don’t take it too lightly. Keep in mind that the Real Estate Market is very dynamic and volatile. Properties can sell at anytime, a house can see no offers and within a day receive four. So when you find the right home, put it in writing and make an offer. Do not fall into the pit of waiting for the perfect property to come along because chances are, it already has.
IF YOU LIKE IT, THE CHANCES ARE, SO DOES SOMEONE ELSE
What are the most important things when looking for your first home?
The most important thing to look for in a home is the structure. You want to make sure that the house is sound structurally and is not going to cave in on itself. Every home experiences movement at some point, this even includes new builds, what you need to look for is how much movement there has been and if the foundation is in good shape or not. Again your REALTOR® will be there every step of the way to advise you on everything. There are different types of foundations such as, poured concrete, concrete brick, brick, preserved wood, etc. All of them have negatives and positives, especially depending on the location of the home and the surrounding soil. In lots of older homes you will find basements have been braced, this is a reinforcement of the foundation and is a corrective and preventative measure. A braced basement done well nods toward a sound foundation.
Do not let aesthetic things in a home sell it for you. Paint can easily be changed, the colour of the house can easily be changed, you can easily knock down walls, and put a little extra money into a home to to some immediate upgrades. Appliances can be changed, most homes come with the appliances, but do not let the quality and type of appliances sell the home for you, in the grand scheme of purchasing a home, appliances are a minor cost.
GO OUT AND SEE HOMES, A HOME IS VERY DIFFERENT IN PERSON THAN ONLINE. PICTURES ARE AND CAN BE DECEIVING!
When writing an offer for a home, your REALTOR® will always ask you about the conditions you want to write in. Always, always have them write in a home inspection. A house can look great on the outside but there can be many hidden (latent) defects that a home inspector will find and reveal to you.
If a home inspection comes back and you are not happy, you do not have to move forward with the purchase. Writing an offer begins the process and does not fully commit you to the home!
YOU CAN AFFORD IT! (Financing)
Lenders and banks do their best to get you the financing you need to purchase a home. There are many different programs in place along with many different avenues you can take in order to obtain a mortgage. The best thing you can do is to shop around. Don’t just go to your bank because it is safe, shop around and try to find the best rate and program that fits your lifestyle.
Getting pre-approved will make the entire process go so much smoother. Not only will you know that you are able to get funding, but you will know exactly what your price range is, you will now your max approval for a mortgage, so you will not be wasting your time looking at properties way out of your budget. This also gives you the ability to more comfortably make offers and properly plan out your finances. Getting approval can be difficult in this day and age, especially if you are working multiple part-time jobs and/or are a contract worker with no foreseeable guaranteed income. The way to still be able to purchase a home is to get a co-signer. Most people use a relative or their parents as co-signers. This helps with you getting mortgage approval. Their name will appear on the title of the home but can be removed after a few years.
You do not need 20% for a down payment
As a first time home buyer you are able to put a minimum of 5% down on a property. This is something to take advantage of! Any mortgage that is less than 20% down is referred to as a high-ratio mortgage. With a high-ratio mortgage you are required to pay default insurance, which is incorporated into the mortgage as a whole. This ranges in amount but is usually less than $10,000. Some banks will even pay the down payment for you and incorporate it into the mortgage as well, they only require you to have a certain amount of money in your bank account to cover closing costs.
When buying a home you can get an improvement mortgage. This is excess funds to use to do upgrades to the property. You can be granted up to 10% of the purchase price of the home in excess funds to be added to the mortgage. In order to obtain this you will need professional quotes for the renovations. The bank does not give you these funds immediately. You will have to complete the renovations and submit the receipts for a one-time reimbursement. If you do not have the funds (as most new home buyers do not) then think about taking out a line of credit for the interim period before reimbursement. This allows you to purchase a home that needs a little work and fix it prior to moving in.
When you purchase a home there are excess costs associated with it. These are referred to as closing costs. This covers things such as any inspections you request, lawyer fees, moving costs, insurance, land title fees, etc. This usually amounts to 1.5% of the purchase price, but can fluctuate.
WRITING AN OFFER(The process)
The process of offering can be complex but with a REALTOR® it is far from it. The first thing to do is find the property you like. Writing an offer initiates the process of buying a home. You make an offer, which can be less or more than an asking price. The offer can be countered by a seller once, if you are unhappy with the counter, you can re-write or make another offer. Your agent will help you with the negotiating and offering process, there are many variables that can influence how to offer.
You need to include a deposit when making an offer, this shows good faith an interest in a property. A good deposit usually ranges from $5,000-$10,000. It is very rare that a buyer ever loses their deposit. I will explain how you possibly could in the following paragraph.
As stated above, you will have to write in conditions, these need to be satisfied and removed from the offer by the agreed upon date. Your agent will advise you on what conditions to write into an offer, the most common and standard conditions include but are not limited to one for financing, a home inspection, a gas line encroachment, a sewer line inspection, etc. If these conditions are not satisfied and you are unhappy with the results, then you can choose not to remove them and have your deposit returned. If they are removed, then the sale is considered to be final. If you decide not to go through with the purchase after the removal of conditions, you will lose your deposit.
After the conditions are removed everything will be sent to you lawyer. You will need to have a lawyer chosen ahead of time. Your agent has a huge network of reputable and trusted professionals and can advise you and recommend many if you have trouble finding one. When writing the offer you need to decide on a possession date, different sellers request different possession dates. This is when you will physically receive the keys. This can range from an immediate possession to 60 days.
The is much more to the process when buying a home, for more info please contact me! I’d love to help! I hope you found this guide useful and informative, we at ccrealty pride ourselves on trying to having the most informed clients.
Hey there, I’m Matthew Taylor. I work with individuals and families looking to buy or sell real estate in Regina and all surrounding areas who are looking for professional, responsive, and honest service to find the property that is best for them and sell their home in the quickest amount of time for the most amount of money. I want my clients to be the most informed, educated, and knowledgeable when purchasing or selling a home. I’ve been a Realtor® for a few years and I’ve served over 10 families to date. The best praise I’ve ever received from a client was:
“As first time home buyers we were nervous, we didn’t know anything about the real-estate market. Mathew Taylor was an amazing realtor to work with , he answered all our questions and made sure we were taken care of. He truly had our best interest in mind in helping us find the perfect home for our little family . We have nothing but good things to say about Matthew and just keep up the good work”.
Helping people to find the perfect home for them like that, makes me so proud and drives everything I do. If you’re looking for a Realtor who truly has your best interests at heart, Then we might be a good fit. I’ve earned two degrees, one in music performance and another in music education. When I’m not helping people find their perfect home, I can be found playing music, teaching music to kids, spending time with my family and friends, or volunteering at the YWCA. Want to learn more about how we can work together? Call or text me at 306-988-7554.